To create CDOs, a bank sells most of its loans to _____ that specializes in issuing securities and bundles the loans into a pool.

A) an investment bank
B) a federal bank
C) the government
D) borrowers

Investment Bank

A financial institution that acts as an intermediary in the issuance of securities and offers corporate services like mergers and acquisitions advice.

CDOs

Abbreviation for Collateralized Debt Obligations, a type of structured asset-backed security with multiple tranches.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership such as options.